Economy

The Portuguese economy has undergone profound changes over the past 50 years. From the colonialist corporative and protectionist modelof the Estado Novo’s, based on agricultural and industrial production, Portugal progressively began (from the 1970’s onwards) to lift restrictions and open its economy. With the 1974 revolution the country underwent a period of adjustment and continuous modernization of its economic model.

During the 1990s Portugal followed an economic policy determined by the Economic and Monetary Union’s (EMU) convergence criteria. The nominal convergence process was successfully completed and the country integrated the Eurozone from its debut in January 1999. This entailed the fulfillment of a set of quantitative criteria aimed at pursuing a rigorous and credible macroeconomic policy.

The structure of the economy has since changed, with a growing dominance of the services sector, similarly to other European partners. In 2011, agriculture, forestry and fisheries accounted for only 2.1% of GVA (comparing to 24% in 1960) and 9.9% of employment; while industry, construction, energy and water accounted for 23.3% of GVA and 27.3% of employment. In that year, services contributed 74.5% to GVA and accounted for 62.8% of employment. In 2016 this trend was even more prominent: the services sector accounted for 75.4% of the GVA, and employed 68.6% of the population. Agriculture, forestry and fisheries accounted for 2.2% of GVA and 6.9% of employment, while industry, construction, energy and water accounted for 22.4% of GVA and 24.5% of employment.

In addition to a higher incidence of services in economic activity, there has been a significant change in the standard of specialization of the manufacturing industry in Portugal in the past decade: it has modernized, departing from a dependence on traditional industrial activities to a situation in which new, more technological, sectors, have gained weight and a dynamic of growth. In this respect, the automotive and components sector, electronics, energy, pharmaceutics and new information and communication technologies should be highlighted. In what concerns services, Portugal's geographic position, enjoying the Mediterranean climate moderated by the influence of the Atlantic, as well as its extensive coastal strip, allied to history and culture, support a relevant and growing tourism industry.

In recent years the Portuguese economy has been undergoing a new period of structural adjustment and consolidation of public finances, in the sense of greater budgetary and commercial balance sustainability. In May 2014 the Government announced the completion and exit of the Economic and Financial Assistance Program (EFAP) agreed with the EU and the International Monetary Fund (IMF) in May 2011), regaining access to financing through international markets. According to the Bank of Portugal, the objectives of the EFAP have been generally fulfilled, with some characteristics of the Portuguese economy (such as the external net borrowing capacity, the primary structural adjustment, the ongoing fiscal consolidation, as well as the transfer of resources from the non-tradable to the tradable sector) constituted some of the positives contributing to the process of sustainable growth. In recent years the Portuguese authorities have made early repayments of the loan granted by the IMF under the EFAP (approximately € 8.4 billion in 2015 and € 4.5 billion in 2016), according to the IGCP - Treasury and Debt Management Agency.

Portugal is among the 50 largest economies in the world and enjoys positive growth prospects, as the macroeconomic data shows.

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